London Calling: First Accounting Roundtable Announced

IASB and FASB plan to hold the first of three meetings on financial reporting during the credit crisis on November 14.

Accounting standards setters are working swiftly to address the global credit crisis by holding the first of three public roundtables in London on Friday, November 14. Less than two weeks ago, the International Accounting Standards Board and the U.S. Financial Accounting Standards Board jointly announced their plans to tackle key financial reporting issues arising from the current global credit crisis by organizing a trio of roundtables. They will be held in Europe, Asia, and North America.

Dates for the roundtable discussions in Norwalk, Connecticut, and Tokyo will be announced shortly. The conclaves are meant to be an opportunity for the two boards to hear input from a wide range of stakeholders, including users and preparers of financial statements, governments, regulators, and others. The roundtables are intended to help the boards identify any accounting issues that may require “the urgent and immediate attention of the boards to improve financial reporting and help enhance investor confidence in financial markets,” according to the announcement released by the boards. As a result, the boards expect that roundtable participants will also identify issues that require longer-term consideration.

The boards have established an advisory group of senior leaders with broad international experience of financial markets to give them advice. The names of advisory board members have not been made public at press time. However, the insights gained at the roundtables will help the deliberations of this group.

The roundtable will be held at the Holborn Bars, 138-142 Holborn, in central London. The day will be split into two sessions, each lasting about 90 minutes. The morning session will begin at 10:30 a.m. London time, with the afternoon session beginning at 1:00 p.m. London time. Access to a webcast of the roundtables will also be available via the IASB website.

To register to attend the event (either as a participant or an observer), send an email to Victoria Blackburn at vblackburn@iasb.org — and reference the financial crisis roundtable. The note should include your name, your organization, and whether you would like to take part in or observe the session. There is limited seating for the event.

Currently, both boards have been discussing tweaking the accounting rules related to fair-value measurement of financial instruments in the wake of the financial crisis. In one instance, IASB rewrote the rules to allow companies — particularly banks — to, in “rare” circumstances, move some assets from the “held for sale” classification — which requires fair-value measurement — to the “held to maturity” category, which permits companies to value the assets using historical cost accounting. The revision changes IASB’s IAS 39 to line it up with FASB’s existing FAS 115.

In another example of a recent rule change, IASB issued new guidance that again mirrors FASB’s standards, emphasizing that the objective of a fair-value measurement is the price at which an orderly transaction would take place between market participants on the measurement date, and not the price set during a forced liquidation or distressed sale. In a third potential change, IASB has released for public comment a reworked IFRS 7, the disclosure rule related to measuring financial instruments at fair value.

Comments on the draft are due December 15. The proposal streamlines disclosure requirements related to changes in valuation techniques for financial instruments. Rather than specifying what circumstances trigger new disclosures, the proposal simply requires that any change in valuation techniques be disclosed — plus the disclosure must include the reason for making the switch.

Last Wednesday, the U.S. Securities and Exchange Commission held roundtables on questions surrounding fair-value accounting, and its applicability in illiquid markets. Then on Friday, the IASB released an 84-page document clarifying its existing guidance on fair-value accounting. It is similar to the FASB guidance released a few weeks prior. Neither IASB or FASB is moving away from their respective intent of requiring companies to use fair-value accounting to record the value of financial instruments.

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